The preventive use of prescription- and non-prescription drugs is a central feature of the care of the elderly. Randomized controlled trials assessing the efficacy of preventive medications in the elderly are costly and may be limited in their generalizability due to selection of participants, shorter duration of treatment, and competing outcomes. However, observational studies of these questions are frequently criticized for biased results. It is therefore vital to develop and apply adequate methods to reduce bias in observational studies that assess the preventive effects of medication use in older patients. Propensity scores and multivariate confounder scores have been proposed to improve control for confounding in such observational studies of medications. Despite increasing use, there is little evidence that better control of confounding is achieved. We propose to assess the validity, statistical efficiency, and applicability of propensity scores and related techniques compared to 'traditional' multivariate analysis in studying the effects of medications in the elderly. The relation between preventive NSAID use and colorectal cancer serves as our primary example to elucidate how propensity scores and multivariate confounder scores can reduce bias. We will use two large cohort studies the Physicians' Health Study and the Women's Health Study to evaluate this association. Because the study focuses on the analytic approach for evaluating such data, and not on the assessment of any single biological mechanism, we explore other possible associations between preventive drug use and health outcomes that were deliberately selected to reflect a wide range of typical analytic situations as the basis for our multivariate simulation studies. Based on the results of these large cohort studies we will conduct extensive statistical simulations to assess the determinants of improved validity and efficiency of propensity scores and multivariate confounder scores for a range of realistic scenarios. Results will be integrated into meaningful and easy-to-use decision rules and practical recommendations for the appropriate use of propensity scores and multivariable confounder scores in observational research in the elderly. These recommendations will be disseminated widely among researchers and practicing physicians.